Study: Cash For Clunkers Didn't Hurt Future Car Sales

From the outset, the Car Allowance Rebate System, better known as CARS or "Cash for Clunkers," was a controversial program. While it generated sales for the beleaguered auto industry, some critics feared it had only succeeded in pulling future sales forward. A new study from Maritz Automotive Research Group, however, says that hasn't been the case.

"The results provide strong empirical evidence that CARS did not impede future sales," said David Fish, vice-president of Maritz. "Vehicles were sold to peoples who don't normally buy them."

While CARS did help stimulate sales between August and July 2009, Maritz says seasonally adjusted sales figures for the rest of the year were no less than those of 2008. Apart from a dip witnessed in September (attributed to depleted dealer inventories across the country), the figures for October, November, and December were as strong -- if not stronger -- than the year prior.

Why? Maritz suggests the majority of CARS customers weren't buyers who would have otherwise bought new. CARS participants were more likely to be first-time buyers, or customers who usually buy used. Roughly only 4 percent of those who utilized the CARS program would have bought a car regardless of the incentive.